Investing

Vice President Kamala Harris on Friday called for an expanded child tax credit, which has been a priority for Democrats.
Her plan would restore up to $3,600 per child or up to $6,000 in total benefits for middle- and low-income families during the first year of a child’s life.
The plan comes less than one week after Sen. JD Vance of Ohio, former President Donald Trump’s GOP running mate, floated a $5,000 child tax credit. 

U.S. Vice President Kamala Harris speaks at an event with U.S. President Joe Biden (not pictured) in Prince George’s County, Maryland, U.S., August 15, 2024. 
Elizabeth Frantz | Reuters

Vice President Kamala Harris on Friday unveiled an economic plan, including an expanded child tax credit worth up to $6,000 in total tax relief for families with newborn children.
The Democratic presidential nominee’s plan aims to restore the higher child tax credit enacted via the American Rescue Plan in 2021, which provided a maximum credit of up to $3,600 per child, according to a fact sheet from the campaign.

The 2021 credit was up to $3,000 or $3,600, depending on the child’s age and family’s income. Harris’ proposed tax break would increase for middle- to lower-income families for one year after a child is born.
“We will provide $6,000 in tax relief to families during the first year of a child’s life,” said Harris during a policy speech in Raleigh, North Carolina.
More from Personal Finance:Vance wants to raise the child tax credit to $5,000. Here’s why that could be difficultThe expanded child tax credit failed in the Senate. Here’s what it means for familiesTrump and Harris both want no taxes on tips. Why policy experts don’t like the idea
The plan comes less than one week after Sen. JD Vance of Ohio, former President Donald Trump’s GOP running mate, floated a $5,000 child tax credit. 
A Trump campaign official told CNBC: “Trump will consider a significant expansion of the child tax credit that applies to American families.”

While Harris has followed President Joe Biden’s footsteps with her proposed child tax credit expansion, the $2,400 bonus for newborns is “different and somewhat surprising,” said Kyle Pomerleau, senior fellow and federal tax expert with the American Enterprise Institute. “That, to me, sounds very much like a response to JD Vance.”
The Harris campaign did not immediately respond to CNBC’s request for comment.

‘Bipartisan momentum’ for the child tax credit

Senate Republicans earlier in August blocked an expanded child tax credit that passed in the House with broad support. However, Republican lawmakers are expected to revisit the measure after the election.
“There is bipartisan momentum behind expanding the [child tax credit],” said Andrew Lautz, associate director for the Bipartisan Policy Center’s economic policy program.

There is bipartisan momentum behind expanding the [child tax credit].

Andrew Lautz
Associate director for the Bipartisan Policy Center’s economic policy program

The size of the expansion and future credit design will hinge on which party controls the White House and Congress. But the House-passed bill and Senate negotiations could be a starting point, Lautz said.

Future child tax credit expiration

Without action from Congress, the maximum child tax credit will drop from $2,000 to $1,000 once Trump’s 2017 tax cuts expire after 2025.
The American Rescue Plan temporarily increased the maximum child tax credit from $2,000 to either $3,000 or $3,600, depending on the child’s age. Families received up to half via monthly payments for 2021.
The child poverty rate fell to a historic low of 5.2% in 2021, largely due to the credit’s expansion, according to a Columbia University analysis.

If there’s a future child tax credit expansion, Pomerleau doesn’t expect it to be as large as the tax break that Harris or Vance have proposed.
Amid the federal budget deficit, lawmakers are already wrestling with trillions in expiring tax cuts that are “prohibitively expensive,” he said.
Expanding the child tax credit to $3,000 or $3,600 could cost an estimated $1.1 trillion over a decade, according to the Committee for a Responsible Federal Budget. Meanwhile, the expansion to $6,000 for newborns could cost $100 billion.
The Harris campaign’s economic plan fact sheet said she would fulfill her “commitment to fiscal responsibility,” including calls for higher taxes on wealthy Americans and large corporations. More

The federal minimum wage has not increased from $7.25 per hour since 2009.
On the campaign trail, Democratic presidential nominee Kamala Harris has said that needs to change.
While some states and companies have enacted their own higher pay thresholds, some say it’s time to raise the national minimum pay rate.

Activists demonstrate in support of a $15-per-hour minimum wage and tips for restaurant workers in Washington, D.C. on Feb. 8, 2022.
Mandel Ngan | AFP | Getty Images

The federal minimum wage recently marked a new anniversary. But for affected workers, that may not be something to celebrate.
The federal minimum wage has now been stuck at $7.25 per hour for 15 years.

On the campaign trail, Democratic presidential nominee Kamala Harris recently suggested that should change.
“When I am president, we will continue our fight for working families of America, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers,” Harris said at an Aug. 10 Nevada campaign event.
More from Personal Finance:Trump and Harris both want no taxes on tips. Experts don’t like the ideaWalz vs. Vance: What candidates could mean for your walletTrump doubles down on call for presidential influence on Fed policy
Many states have enacted minimum hourly pay rates that are higher than the federal minimum wage. Yet 20 states have wages that are no higher than the federal level, according to Business for a Fair Minimum Wage. They include Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Wisconsin and Wyoming.
The federal minimum wage for tipped workers is $2.13 per hour, provided their tips bring them to the $7.25 per hour federal minimum wage. Michigan recently became the first state in more than four decades to eliminate the subminimum wage for tipped workers.

Harris has not said how high she wants to raise the minimum wage, though she has praised states that have raised the rate to at least $15 per hour.
The Harris campaign did not return a request for comment by CNBC.

Congressional Democrats in 2021 tried to raise the federal minimum wage to $15 per hour as part of a broader Covid relief package. However, those efforts failed after it was determined the change could not be included in legislation handled through a one-party majority.   
During a 2020 debate, then President Donald Trump expressed concerns about whether raising the federal pay threshold would hurt small businesses.
“How are you helping your small businesses when you’re forcing wages?” Trump said during the 2020 debate. “What’s going to happen and what’s been proven to happen is when you do that these small businesses fire many of their employees.”
Trump’s campaign did not respond a request for comment by CNBC.
A CNBC survey from earlier this year found a majority of small business owners — 61% — support raising their state’s minimum wage, though half said such a change could make it difficult to be able to afford to pay workers who are critical to their businesses.
One point that tends to get lost in the minimum wage debate is the connection between a higher wage and stronger consumer buying power, according to Holly Sklar, CEO of advocacy group Business for a Fair Minimum Wage.
“When you lose minimum wage buying power, it means you’re losing customer buying power,” Sklar said.
Once workers earn higher minimum wages, they will be more likely to spend that money, which will help businesses, she said.
Raising today’s federal minimum wage would help low-wage workers who are trying to earn a living and have a sense of economic security, said Ben Zipperer, senior economist at the Economic Policy Institute, a Washington, D.C., think tank that provides economic research.
“The minimum wage has basically lost, 29%, 30% of its purchasing power over the last 15 years, simply because Congress has failed to update it,” Zipperer said.

Lifting the minimum wage threshold to $15 per hour would increase the incomes of about 20 million workers, Zipperer said. That would include people who are low-wage workers who may be earning hourly pay that is slightly more than the federal minimum wage threshold.
“Changes in wages don’t necessarily result in big changes in employment,” Zipperer said.
“When you raise wages at a particular workplace, that makes it a lot easier to recruit and retain workers,” he said.
Some companies, such as Target and Walmart, have set their own higher minimum pay thresholds, at $15 and $14 per hour, respectively, in response to tight retail labor market conditions.
Still, advocates hope for a broader change at the national level.
“We look forward to supporting efforts to raise the minimum wage in the next White House, in the next Congress, and showing that there’s a very good business case for that,” Sklar said. More

The 20 most-watched stock-picking videos on TikTok from 2023 to June 2024 show that over 64% of the 87 total stock predictions in these videos came out accurate.
Experts that CNBC spoke to warned against talking wholesale advice from these “finfluencers,” but agreed that they help promote financial awareness among young investors.

FILE PHOTO: TikTok app logo is seen in this illustration taken, August 22, 2022. 
Dado Ruvic | Reuters

Investing in equities can be a complex exercise, warranting specialized guidance. From where can one get that advice?
Some attempt to do their own research, poring over reams of financial indicators to identify potential winners, while others consult investment advisors and experts with years of experience in the market.

There are also people who look at the movement of celestial bodies or the earthly elements to determine where to put their cash.
And then there are those who turn to social media, scrolling through their feeds to seek out “financial influencers” or “finfluencers” to multiply their their money.
Let’s take a look at that last set of advisors — the “finfluencers” — as there popularity, especially among young investors, has been growing and could supersede that of traditional investment advisors.

Track record

While the idea of investing based on advice from someone on Tiktok appears risky — maybe not as much as investing based on astrological signs — these “finfluencers” have had quite a solid track record in the first half of 2024.
The investment theme for the first half of 2024 was dominated by an outsized focus on the tech industry, especially on stocks that are a part of the artificial intelligence value chain.

Brokerage aggregator site BestBrokers analyzed the 20 most-watched stock-picking videos on TikTok from 2023, that recommended shares that could potentially surge in 2024.
The team then tracked the prices of the recommended stocks from the day the videos were posted up until June 21, 2024. It also calculated returns on a $1,000 investment in each stock or ETF recommended in these videos.
“Our findings show that over 64% of the 87 total stock predictions in these videos came out accurate, including the remarkable rallies of AI stocks such as Nvidia and Qualcomm,” the BestBrokers report from July said. About 36% of the recommendations resulted in losses.
The report said that a majority of the influencers had advised picking stable, blue-chip stocks such as Google, Nvidia and Amazon, something that traditional money experts also advise to people looking for less risky investments.
The most profit that an investor could have generated from a single stock would have been Nvidia, which grew 63.08% in the period surveyed. An investment of $1,000 in the stock would’ve grown to a substantial $1,630.79.
On the flip side, a $1,000 investment into the worst performing stock — New York-listed biotech company Ginkgo Bioworks Holdings — would have fetched a 74.74% loss.
What if one decided to cut the risk by not betting on a single name and, instead, diversified by purchasing all stocks recommended in a single video?
If a person invested $1,000 in every stock recommended in the one video that got the most bets right, the gains would have amounted to $4,860.
However, “[this] would require a $23,000 initial investment in 23 different stocks, some profitable, some not so much.”
On the other hand, putting money into all the stocks recommended in the video that got most bets wrong would have led to a loss of $1,517. 

Credibility concerns

Given the aforementioned track record, is following advice proffered by financial influencers a reliable method for growing your wealth?
Experts CNBC talked to do not think “finfluencers” are a sound alternative to professional analysts and brokers.
Gerald Wong, founder and CEO of Singapore investment advisory platform Beansprout said it may not be fair to conclude that these “finfluencers” can be trusted, simply because a lot of their stock predictions were accurate over a short time period. Wong also added that the broader U.S. stock market in general did well during the period of the study.
The accuracy of their predictions is “spurious,” said Jeremy Tan, CEO of asset and wealth management firm Tiger Fund Management. “Furthermore, a single period coincident result does not translate to a definitive conclusion of predictability in the long run.”
Jiang Zhang, head of equities at First Plus Asset Management, said that as these influencers are largely unregulated and have unknown credentials, they could have questionable objectivity.
They could be paid by companies to promote those shares, or might be front-running — recommending shares they own to others with the aim of boosting stock prices and then cashing out — Zhang said.
The motivations of these “finfluencers” could be in conflict with the interests of those who are seeking advice on these platforms, Tan said. “Recommendations or opinions found online could often be biased, unverified and provided by individuals that are not professionally certified or regulated.”
“Very often, insufficient disclosures are provided for the public to discern the independence of such recommendations,” he added.

Investor education

For all their caution against taking investment advice from “finfluencers,” the experts agreed that social media content creators, especially on Tiktok, do help spread financial literacy among younger investors.
Beansprout’s Wong, who was with Credit Suisse for 13 years before founding his investment advisory platform, suggested that Gen Z investors have a “keen desire” to learn more about investing through self directed means, compared to consulting with a financial planner or advisor.
In a survey conducted by Beansprout, more than half of the respondents said that they were not confident about the investment decisions they have made, signaling a dearth of investment advisory avenues.
“We believe this reflects how access to expert investment insights has not caught up with the proliferation of investment platforms and products in the market,” Wong said.
Influencers could bridge this gap by distilling research and content into bite-sized content that is easily relatable and digestible for retail investors, according to Emelia Tan, director of research and financial literacy at the Singapore Exchange.
First Plus’ Zhang said, “compared with traditional financial news media that report mostly factual events, the finfluencers’ investment narrative offer retail investors the most value as it helps the viewers on how to craft an investment view based on publicly available information.”
He does not think that “finfluencers” and professional advisors should be seen as mutually exclusive avenues for investment know-how.
Influencers can be a starting point for investors to get the basics of investing and wealth management, but they should seek professional financial advice from established and regulated financial institutions, given the superior investor protection offered by these institutions, Zhang said. More

About 2.9 billion people may have had their personal financial data compromised, a lawsuit alleges.
“It’s not a matter of if, it’s a matter of when” you may be personally affected by a breach, one expert says.
Experts say there’s one best step to take to protect your personal data.

Sakorn Sukkasemsakorn | Istock | Getty Images

About 2.9 billion people may have had their personal information hacked, a new proposed class action lawsuit alleges.
If true, reports suggest all Americans may have had valuable personal information compromised — including full names, current and past addresses, Social Security numbers and information on parents, siblings and other relatives.  

The alleged April 2024 breach occurred when a background check company doing business as National Public Data, owned by Jerico Pictures Inc., failed to properly safeguard information it scraped, the lawsuit states. The company provides instant search access to billions of records.
Neither National Public Data nor Jerico Pictures returned requests for comment by CNBC.
“If this turns out to be accurate … then it would just basically mean that everyone’s affected,” said Cliff Steinhauer, director of information security and engagement at The National Cybersecurity Alliance, a nonprofit focused on cybersecurity awareness and education.

However, this breach may not be as far-reaching as reports suggest, said James E. Lee, chief operating officer at the Identity Theft Resource Center, a nonprofit working to minimize the risk of identity theft.
For example, if there were multiple records per individual compromised, that could reduce the total number of people affected. If other countries were affected too, that could reduce the number of Social Security numbers involved. In addition, much of the information leaked may have already been available elsewhere, he said.

‘You’re vulnerable forever’

Massive data breaches are not new.
A 2017 Equifax data breach was estimated to have affected half the U.S. population. In 2013, a Yahoo data breach may have hit all the company’s accounts, or a total of 3 billion people.
Still, experts say the news of this latest breach should put consumers on high alert.
“It’s not a matter of if, it’s a matter of when,” Steinhauer said. “I’d be surprised [if] there are many people who haven’t been affected by a data breach like this already, just because of the sheer number of breaches that have happened that contain similar data.”
More from Personal Finance:Social Security cost-of-living adjustment may be 2.6% in 2025Here’s the inflation breakdown for July 2024A U.S. construction boom is sending rents lower
Consumers tend to find out their information may have been compromised through data breach notices from the companies affected.
“We’ve got enough data now to say if you get a data breach notice, there’s a high likelihood that you’re going to suffer an identify crime at some point within 12 months,” Lee said.
While it’s still not possible to directly correlate a breach to an identity theft, he said, the risks have no expiration date once your information has been exposed.
“You’re vulnerable forever,” Lee said.

Freezing your credit is the ‘No. 1 piece of advice’

The best tip to protect your personal records is to put a security freeze on your credit reports, which will limit access to your records, experts say.
It’s also the best first step if you think your data has been compromised.
“Freezing your credit is the single most important thing you can do when you get a data breach notice,” Lee said.
The process can be done quickly and for free by submitting separate requests to each of the three credit bureaus, which includes Equifax, Experian and TransUnion.
While freezing your credit will limit access to your credit reports, it won’t block it completely. Your records will still be available to certain companies and under certain circumstances.
The freeze doesn’t just block bad actors. Notably, if you want to apply for a new credit card or auto loan, you may get rejected if you do not unfreeze your credit first.

As you freeze your credit, you should proceed with caution. Make sure you’re not clicking on a lookalike domain that purports to be one of the three major credit bureaus that could instead be operated by hackers, Steinhauer said.
Additionally, do not open your personal records on public Wi-Fi, he said.
Consumers can purchase additional protection through dark web monitoring services, which will let you know when your information is compromised. While that step can provide peace of mind, it’s not going to stop anything from happening, Lee said.
Consumers should also make sure they have strong and unique passwords that use multifactor authentication, where two or more steps are used before access to an account is granted. Consumers may want to consider using a password manager, which can help generate strong passwords and store those codes, Steinhauer said.

Don’t miss these insights from CNBC PRO More

As you approach retirement, a threat, known as the “sequence of returns” risk could jeopardize your portfolio.
The issue stems from poor investment returns paired with withdrawals, particularly earlier in retirement, which can shrink your nest egg over time.
However, you can minimize the risk via portfolio diversification, fixed-income allocations and flexible withdrawals.

Getty Images

How sequence risk hurts your portfolio

Investors can typically start withdrawing funds from retirement accounts without penalty at age 59½.
But there’s a big risk for younger retirees or near-retirees who experience stock market downturns just before or as they start tapping accounts.

Withdrawing from your portfolio when the stock market drops could mean selling more assets for the same amount of cash. As a result, you’re left with fewer investments to capture future growth when the market rebounds.

It’s the biggest issue for younger retirees with decades of living expenses to cover from their nest egg, experts say.
Here are some ways to mitigate your sequence of returns risk, according to financial advisors.

Diversify your portfolio

As retirement approaches, it’s important to adjust portfolio allocations from heavy concentrations in higher-risk assets to less volatile investments like bonds, experts say. The right mix may depend on several factors, including your risk tolerance, goals and life expectancy.
“Diversification among several different asset classes can help make volatility less pronounced,” Lyon said.

Diversification among several different asset classes can help make volatility less pronounced.

Collin Lyon
Wealth strategy advisor at Anderson Financial Strategies

Build a ‘war chest’ to fund living expenses

You can avoid selling assets in a down market by keeping a six-month emergency fund and a “war chest” to cover living expenses, according to CFP Jonathan Bednar II, a wealth advisor at Paradigm Wealth Partners in Knoxville, Tennessee. 
For Bednar’s clients, the war chest includes five years of expenses in fixed-income assets — typically in a bond or certificate of deposit ladder — so retirees can “weather any market volatility,” when the sequence risk is highest, he said.

Opt for a flexible withdrawal rate

Flexible withdrawals are another way to safeguard your portfolio from sequence risk, experts say.
“Instead of withdrawing a fixed percentage, the rate can be adjusted based on market performance,” explained Orlando-based CFP Brad Brescia with Moisand Fitzgerald Tamayo.
Reducing withdrawals during years of negative returns “can help preserve the portfolio’s core,” he added. However, some retirement accounts eventually have required withdrawals. More

More than one-third, 33.2%, of landlords offered at least one rent concession in July, according to Zillow Group.
the median asking rent prices for apartments in one- to three-bedroom units fell in July, the first time that’s occurred since 2020, according to Redfin, a real estate brokerage site.

Aleksandarnakic | E+ | Getty Images

A construction boom in the U.S. has resulted in lower rents and other benefits for renters.
Record-construction activity since the pandemic has increased the supply of empty units, meaning more inventory is available for renters. More multifamily units were completed in June than in any month in nearly 50 years, according to Zillow Group, an online marketplace for real estate.

Landlords are taking notice and are now adding rent concessions — discounts, incentives or perks to attract new renters — like free weeks of rent or free parking. 
About one-third, 33.2%, of landlords offered at least one rent concession in July across the U.S., up from about one-quarter, 25.4%. last year, Zillow found.
More from Personal Finance:Here’s when it makes sense to tap your home equity: It ‘won’t go stale’Housing affordability is ‘moving in the right direction,’ economist saysWhat to know before you refinance or buy
Meanwhile, the median asking rent prices for apartments in one- to three-bedroom units fell in July, the first time that’s occurred since 2020, according to Redfin, a real estate brokerage site.
The median asking rent price for a studio or one-bedroom apartment fell 0.1% to $1,498 a month; two-bedroom apartments decreased 0.3% to $1,730; and units with three bedrooms or more, were down 2.% to $2,010, per Redfin data. 

Rents are still high because of how much prices climbed during the pandemic, said Chen Zhao, who leads the economics team at Redfin. But now, rent growth has flattened, which can be seen as “good news for renters,” she said.

Sun Belt states are leading the trend

Metro areas in Florida and Texas, two Sun Belt states that have introduced a high number of newly built apartments since the pandemic, are seeing significant rent price declines as more units become available, according to Redfin.
For example, the median asking rent price in Austin, Texas, fell to $1,458 in July, a 16.9% decline from a year prior, according to Redfin. It was the biggest drop among all other analyzed metro areas in the national report, the firm noted.
The median asking rent price in Jacksonville, Florida, declined 14.3% in the same time frame, to $1,465, per Redfin.
To compare at a state-wide level, the median rent price in Texas stands at $1,950, according to Zillow. That comparable price in Florida is $2,500, it found.

Rent concessions are up from a year ago in 45 of the 50 largest metro areas in the U.S., according to Zillow.
The annual increase in the share of rental listings offering concessions is the highest in Jacksonville, Florida, which saw concessions rise 17 percentage points, followed by Charlotte, North Carolina (15.7 points), Raleigh, North Carolina (14.7 points), Atlanta (14.5 points); and Austin, Texas (14.1 points), per Zillow data.

How wage growth helps rent costs 

Historically, wage growth and rent growth have been very linked, said Orphe Divounguy, a senior economist with Zillow’s Economic Research team.
How tight the labor market is can be predictive of how tight the housing market is going to be, he explained.
The labor market has eased recently, with the number of candidates outpacing the jobs available. In July, nonfarm payroll increased by just 114,000 for the month, down from 179,000 in June, according to the Bureau of Labor Statistics. The unemployment rate jumped to 4.3%, the highest level since October of 2021.
“When wages are rising rapidly, that helps to support housing demand,” said Divounguy. “As the labor market loosens, we expect the rental market to continue to loosen.”

Wages are growing 4% to 5% year over year, said Zhao: “That’s good. That means that rents are actually falling relative to wages. Your wages are increasing more than rents are.” 
To be sure, wage growth has slowed. Wages and salaries increased 5.1% in June for the 12-month period ended in June 2024, according to the Bureau of Labor Statistics. 
Wage growth peaked at 9.3% in January 2022, and has slid down to 3.1% by mid-June, returning to pre-pandemic wage levels, according to Indeed Hiring Lab Institute. More

As Social Security marked its 89th anniversary, the program faces looming fund depletion dates.
Lawmakers have suggested tax changes, including eliminating taxes on benefits or raising how much the wealthy must contribute to the program.
Here’s what those changes would mean for benefits.

Phoenix Wang | Moment | Getty Images

Voters say Social Security is a ‘top’ election issue

President Franklin D. Roosevelt signs the Social Security Act into law on Aug. 14, 1935.
FPG | Archive Photos | Getty Images

On Wednesday, Social Security reached the 89th anniversary since President Franklin D. Roosevelt signed the program into law.
The program now faces an uncertain future, as its combined trust funds are projected to run dry in 2035. At that time, unless Congress acts sooner, beneficiaries may see an across-the-board 17% benefit cut.

The program’s trust fund that pays retirement benefits is due to run out even sooner, in 2033, risking a 21% cut to those benefits.
Social Security’s future is “one of the top” or a “very important” issue in how voters plan to choose candidates in the November presidential election, a new CNBC poll finds.
“I believe, from my conversations with lots of people on both sides of the aisle on Capitol Hill, that there’s the will to actually examine this and extend it for many, many years to come,” Social Security Commissioner Martin O’Malley told CNBC “Squawk Box” on Wednesday.

Social Security fixes likely to include tax changes

Trump is not the first to suggest the elimination of taxes on Social Security benefits. One Democratic bill introduced in January in the House of Representatives — the You Earned It, You Keep It Act — likewise calls for excluding Social Security benefits from gross income for federal income taxes.
If enacted, the bill would save the typical senior household almost $560 per year, the Senior Citizens League, a non-partisan senior group, recently estimated.
But the move would increase federal deficits by $1.6 trillion to $1.8 trillion through 2035, non-partisan public policy organization Committee for a Responsible Federal Budget, found in a recent analysis of Trump’s idea. Moreover, it would increase Social Security’s 75-year shortfall by 25%.
A Trump campaign spokesman did not return a request for comment by CNBC.

Republican presidential candidate and former U.S. President Donald Trump gestures as he leaves, after casting his ballot for early voting in Florida’s primary election, in West Palm Beach, Florida, U.S. August 14, 2024. 
Marco Bello | Reuters

Larson is instead touting a broader reform package — the Social Security 2100 Act — that would broadly make benefits more generous and pay for those increases by imposing higher taxes on the wealthy.
The bill would include a 2% across-the-board benefit increase, as well as more targeted increases for lower-income seniors, widows and widowers and students. The proposal would also eliminate current rules that result in reduced benefits tied to public servants, known as the Windfall Elimination Provision and Government Pension Offset.
To pay for those changes, the bill calls for raising the Social Security payroll tax thresholds for wealthy earners. In 2024, up to $168,600 in earnings are subject to those levies. The bill calls for reapplying the tax on earnings over $400,000. It would also apply a higher net investment income tax rate for those higher earners.

Altogether, the bill’s provisions could help extend the program’s ability to pay full benefits by 32 years, the Social Security Office of the Chief Actuary estimated last year.
The Social Security 2100 bill has been reintroduced in various sessions of Congress. Larson, who is running for reelection, said he plans to reintroduce it again in the next session.
While the current version has 188 Democratic co-sponsors, Larson said he hopes for the backing of two other notable leaders — Democratic presidential candidate Kamala Harris and her running mate, Tim Walz.
As senator, Harris was a co-sponsor of a bill that similarly called for making benefits more generous while raising taxes for the wealthy. As vice president, the White House administration likewise called for expanding Social Security and taxing the wealthy.
Meanwhile, Walz was an original co-sponsor of Social Security 2100 during his time as a congressman representing Minnesota, according to Larson. As governor of Minnesota, Walz increased the state tax exemption for Social Security benefits.

Rep. John Larson, D-Conn., and other lawmakers discuss the Social Security 2100 Act, which would include increased minimum benefits, on Capitol Hill on Oct. 26, 2021.
Drew Angerer | Getty Images News | Getty Images

The Harris-Walz campaign did not return a request for comment from CNBC.
While Republicans have considered other changes to Social Security — such as raising the retirement age — Larson hopes he can eventually lure leaders from the other side of the aisle to support his proposal.
“We’re going to lift the cap on people [earning] over $400,000 and the other side says, ‘Here you go again. It’s tax the wealthy,'” Larson said. “No, it’s have them pay their fair share.”
In congressional hearings on the program, Republican lawmakers have raised concerns about the costs associated with reforming the program. Ultimately, restoring Social Security’s solvency may require a compromise including both tax increases and benefit cuts.
Rep. Jodey Arrington, R-Texas, commended Larson for his passion and for putting a proposal on paper during an April Ways and Means Social Security subcommittee hearing.
“Even if I disagree, and in some cases wildly disagree, with his way of solving it, we’re going to have to get in a room and we’re going to have to hold hands and leap off the cliff of those who criticize us who do anything to reform the program,” Arrington said.
While critics question whether lawmakers will bring the bill forward for a vote, Larson said he hopes to see progress on Social Security in the next Congress or in the coming lame duck session. More

As new government data shows inflation subsiding, Social Security beneficiaries may expect a lower cost-of-living adjustment in 2025.
The prospective Social Security COLA for 2025 could be the lowest since 2021, according to a new estimate.

Rapideye | E+ | Getty Images

Even as new government inflation data shows inflation subsiding, many retirees are still struggling under the weight of higher costs.
Next year’s Social Security cost-of-living adjustment, or COLA, may not provide much relief.

In 2025, the Social Security COLA may be 2.6%, according to Mary Johnson, an independent Social Security and Medicare policy analyst.
That’s down from the 3.2% boost to benefits Americans saw in 2024. It’s also substantially lower than the 8.7% COLA Social Security beneficiaries received in 2023, and the 5.9% increase for 2022.
The prospective Social Security COLA for 2025 would be the lowest since 2021 but in line with the average cost-of-living adjustments for the past two decades, according to Johnson.

The estimate for 2025 is still subject to change. The annual Social Security cost-of-living adjustment is calculated based on third-quarter data from a subset of the consumer price index, known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.  
The size of the official increase may change as new CPI data comes in.

The Social Security Administration typically announces the COLA for the following year in October.

Older Americans feeling ‘lingering effects’ of high costs

More than half of adults ages 50 and up — 61% — worry they will not have enough money to support them in retirement, according to a recent AARP survey.
Inflation is also a persistent concern for those older Americans, with 37% worried about covering basic expenses such as food and housing. Meanwhile, 70% are worried about prices rising faster than their incomes.

High inflation tends to hurt retirees more than near-retirees, since retirees’ income is less likely to go up as prices rise, according to the Center for Retirement Research at Boston College.
Social Security benefits — which are adjusted annually for inflation — are an exception.
However, some experts argue the annual increases to benefits have fallen short.
The average Social Security benefit has lost 20% of its buying power since 2010, according to recent research from the Senior Citizens League, a nonpartisan senior group.
Today’s average monthly benefit for retired workers would have to increase from $1,860 to $2,230 — nearly 20% — to keep pace with 2010 buying power, the group’s research found.
More from Personal Finance:How to get your personal Social Security benefit estimateRecord backlog leads to $1.1 billion in improper Social Security paymentsHow retirement ‘super savers’ amass the biggest 401(k) balances
Another measure for the cost-of-living adjustment — the Consumer Price Index for the Elderly, or CPI-E — may better reflect the costs retirees face, advocates including the Senior Citizens League have said.
However, not all experts agree the cost-of-living adjustment measure should be changed.
While the annual adjustments are now calculated using a backward-looking method, they tend to fully compensate for inflation over time, Alicia Munnell, director of the Center for Retirement Research at Boston College, previously told CNBC.com.
Though the CPI-E has previously risen faster than the currently used measure for the cost-of-living adjustments, that gap narrowed in recent years, research from the Center for Retirement Research found. Consequently, switching to the CPI-E may not be the most effective move, the authors argued.

Don’t miss these insights from CNBC PRO More